Financial Report

Transcription

1 香港浸會大學 HONG KONG BAPTIST UNIVERSITY 財務報告 FINANCIAL REPORT 二零零三 / 零四年度

2 Contents 1 Highlights! 2 Statistical Tables and Charts! 6 Treasurer's Report!"# 14 Report of the Auditors! 18 Financial Statements!"# 24!"#$%%&'()*+ 60 Hong Kong Baptist University 1998 Superannuation Fund

3 Highlights!"#$%&' () Year ended 30 June (Note) (!") (Expressed in millions of dollars) 1!"#$% Recurrent UGC Subventions Highlights!"#$%& Tuition, Programmes and Other Fees!"# Income on Self-financed Activities Donations Received !=! "#$% Number of Students (UGC-funded Programmes) Headcount!"#$ Full-time Equivalent 5,523 5,273 5,017 4,797 4,775 4,995 4,769 4,594 4,414 4,398!=!"# Number of Students (Self-financed Programme) Headcount 45,181 50,445 46,305 42,331 38,674!"##$%&=!"#$ Number of UGC-funded Full-time Staff (Full-time Equivalent) 1,393 1,363 1,331 1,281 1,036!"##$%& Number of Self-financed Programme Full-time staff !! "#$%&'( Tuition Fees Per Annum (UGC-funded Full-time Programmes) ($) 42,100 42,100 42,100 42,100 42,100 : Note :!"#$%&'%()*+,-./ :;!<=>?@)*+A/0BC4DE79 Accrual accounting was adopted in 2004 and 2003 figures had been restated for comparative purpose. The figures for 2000 to 2002 were prepared on cash basis and listed for reference only.

4 ! Statistical Tables and Charts

5 ! Statistical Tables and Charts (!") (Expressed in millions of dollars) Statistical Tables and Charts! % 28.3% 8.0% 11.4% 3.3% 1.1% Income 860.9! Government Subventions 507.7!"#$%& Tuition, Programmes and Other Fees 204.9!"# Donations and Benefactions 144.6!"#$ Interest and Investment Income 59.8! Auxiliary Services 19.4! Other Income 61.0% 3.6% 4.3% 2.1% 9.7% 13.0% 4.6% 1.7% Expenditure 810.5!" Instruction and Research 173.0!"#$ Premises and Related Expenses 128.8!"#$ Management and General 61.6!"#$%& Student and General Education Services 56.7!"# Central Computing Facilities 48.1 Library 27.5!"# Other Academic Services OPKM! Other Activities

6 ! 5 Years Comparison (!") (Expressed in millions of dollars)!"# fååçãé=çå=péäñjñáå~ååéç=^åíáîáíáéë 4 açå~íáçåë=oéåéáîéç Statistical Tables and Charts! !"#$%&! "#$% qìáíáçåi=mêçöê~ããéë=~åç=líüéê=cééë Erd`JcìåÇÉÇ=mêçÖê~ããÉëF

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8 ! Treasurer s Report

9 ! Treasurer s Report Treasurer s Report! 7!"#$%&'()*+,-.*!"#$%&!"#!"#$%&'()#*!"!"#!"#$%&'()!"#$%&'()*+,-.//0!"#$ %!"&'()*!"#$%&'()*+,-./#!"#$!"#$%&"'()* +,-.!"#$%&'()*+,-./01!"#$%&'(')*!!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+, OVERVIEW While the reporting year 2003/04 was originally the last year of the current funding triennium, the University Grants Committee ("UGC") subsequently decided to extend this triennium by one more year to facilitate the adoption of a new funding model starting Nevertheless, such a move did not disrupt the University's cost-saving plans in 2003/04 and 2004/05 which were configured in anticipation of the Government's pronounced policy to reduce funding to the tertiary education sector. With the concerted efforts of the whole University community, the University recorded a surplus of $468.1 million for the year. Such a record result (3.3 times of that in the previous year) was attributed to the University s successful donation drive, the post- SARS investment market recovery and the better-than-target performance in cost-savings.!"#$%&'()*+,,-./!"#$%&'()*+,-./&0!"#$%&'()*+,-!!"#$%&'()*+,-./01!"#$%&'()*+,-.&'/!" During the year, the University completed its Pay and Reward Structure Review for staff, a logical development consequent to the "delinking" of University Salary Scales from Civil Service Pay Scale which took effect from 1 July The new pay and reward structure will provide the University with the flexibility needed for long-term sustainability amidst the tightening financial environment and the series of development activities in the next few years.!"#$%&'()*+,!"!"#!"#$%&'()*+!"#$%&%'()*+,,-..!"#$%&'()*+,-./01!"#$%&'()*+,-./!"#$!"#$%&'()*+,-./01!"#$%&'()*+,-%./0!"#$%&'()*+,-.&/0!"#$%&'()*+,-./01!"#$%&'()*+,-./01 At the time of writing this report, the algorithm for funding adjustment arising from the "delinking" was still unsettled pending the consideration by Government of a joint proposal from the eight UGC-funded institutions already submitted in late Such prolonged delay has not facilitated but added increasing uncertainties and difficulties to the financial planning of the institutions. CHANGES IN ACCOUNTING POLICIES This year the University has taken a major step forward in aligning its financial reporting policies with the generally accepted accounting principles in Hong Kong and the international financial reporting standards. The new reporting

10 !"#$%&'(&)*+,-./0!"#$%&'()*+,-./$!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+,-./0!"#$%&'()*+,-./01!"#!"#$%!"#$%&' ()*+,-./!"#$%&'()*+,-./01!"#$%&'()**)+*,-.!"#$#%&'()*+,-./0!!"#$%$&'()*+,-./!"#$%&'()*+,-.*&/!"#$%&'()* +,-.(!"#$%&'()*+,-./+0!"#$%&&'(&)*+,-./!"#$%&'()*+,-./01!"#$%&'()*+,+-./0!"#$%!&'()*+,-./!"#$%&'!"#$%&'()*+,-./01!"#$%&'()*+,-./!"#$%&'()*+,-./01!"#$%&'()*+,-.'"/!"#$%&'()*+,-./01!"#$%&'()*#+,-./01!"#$%&'()*+,-./0#!"#$%&'()*+,-./ format of the Income and Expenditure Statement as well as the changes in accounting policies are elaborated in more details in the sections to follow and the. The major changes include full accrual accounting for all expenditure items irrespective of the nature and funding source, deferral of government grants received in advance of related expenditure, and inclusion of endowment receipts in the Income and Expenditure Statement. In a nutshell, these changes resulted in a slight reduction in expenditure and a higher fund balance carried forward to future periods to meet expenditures which would otherwise be recognized in the current period under the former accounting policies. RESULTS OF UNIVERSITY OPERATIONS Income While total Government funding in 2003/04 remained almost the same as last year, the approved recurrent grant of 4,560 full-time equivalent students was 4.4% less than that of 2002/03. Such a reduction included the grant revision arising from the 3% downward adjustment of the Civil Service Pay Scale effective 1 January Rates and Government Rent Refund, Capital Grants, and Alterations, Additions and Improvements ("AA & I") Block Allocation increased substantially over the year, offsetting the effect of the reduction in Block Grant. The level of other income items in 2003/04 was similar to that of the previous year with the exception of Interest and Investment Income, and Donations and Benefactions. The former has increased by 2.5 times to $144.6 million while the latter by 3.5 times to $204.9 million. Expenditure Learning and Research remained at its usual level of around 61.0% of the total expenditure in 2003/04, with Instruction and Research increased in absolute terms from that of the previous year. Management and General was trimmed down by 4.8% to $128.9 million. Premises and Related Expenses significantly increased as a result of a back-duty on Government Rent and Rates accrued to buildings completed and occupied in the past two years. Such back-duty Rent and Rates were fully reimbursed by the Government under existing funding arrangements. Treasurer s Report! 8

11 !"# UGC-funded activities Treasurer s Report! 9!"#$%&'()*+,-./01!"#$%&'()*+,-./0!"#$%&'()*+,-./01!" #$%&'()*)+,-./!"#$%&'()*+,-.//0!"#$%&'!"()*+,-,.!"#$!!"!"#$$%!"#$%&'()*+*,-./0!"#$%&'()*+,-../0!"#$%&'()*"+,-./!"#$%&'()*+%,-./!"#$%&'()*+,-"./0!"#$%&' During the year, the University continued with its planned costsavings programme to reduce its recurrent commitment base in anticipation of the reduction in recurrent funding from the Government. Efforts were made to build up reserves as much as possible to prepare for the rainy days. On UGC-funded operations, a balance of $67.5 million was rolled over to 2004/05 to cushion the impact of the more than 10% grant reduction in that year. The Academic Community Hall ("AC Hall") was fully integrated into UGC-funded operations with effect from 1 July Funded by an AA & I Block Allocation, a large scale overhaul to address the safety issues of the AC Hall was carried out and completed in the first half of The downtime has provided an opportunity for the AC Hall to reorganize its operations with the view to minimizing future costs.!"#$%&'!!"#!"#$%&'()*+,-./01!"#$%!"#$%&'()*!"#$%&'()*+&,-./0!"#$%&'()*+,-./01!"#$%&'()*+,- The planned return of another tower of staff quarters to the Government arising from the implementation of the Home Financing Scheme ("the Scheme") is likely to be aborted in light of the "delinking" which ends the availability of the Scheme to new appointees of the University after 1 July The University is in the process of negotiating with the Government relating to the compensation for the return of two towers of staff quarters in Fo Tan earlier.!!"#$%&'()*+,*-./0!"#$!%&'&()*+,!"#$%&'()*+,-./0%!"#$%&'()*!""#!"#$%&'()*+(,-.!"#$%&'()*!"#!"#$%&'()*+,-./01!"!#$%&'()*+, Self-financed activities Income from Self-financed Activities increased to $404.7 million (2003: $366.9 million), with a slight reduction in the School of Continuing Education ("SCE") activities and a significant increase in taught post-graduate programmes. The latter reached a record high of $63.6 million in 2003/04 (2003: $47.1 million), following the requirement of the UGC to turn most of these programmes into self-financed from their former UGC-funded mode.!"#$%&'"()*+,-./0!"#$%&'()*+,-./ Nonetheless the performance of SCE was better than satisfactory with a surplus of $21.5 million (2003: $51.0 million) from programme operations and $39.8 million (2003: $10.3 million)

12 !"#$%&'()*+,-./01!"#$%&'()*!"#!"#$%&'()*!"#!"#$%!"#$%&'()*+,-./01!"#$%&'()*+,-./0!"#$%&'()*+,-./01!"#$%&'(!"#$%!"!"#$%&'()*+!"!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"!"#$%&'()!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%& '()*+,-./0!"#$%& from interest and investment income, despite disappointing operating results of the Shenzhen Learning Centre operations and the affiliated kindergarten. Following the advice of the Audit Commission, the Student Residence Hall ("the Hall") has implemented strategies to improve overall occupancy to 95%. As a result, the Hall has lifted its operating surplus after reserve provision to $3.5 million (2003: $1.3 million), and this provides a solid financial foundation to improve the Hall s services to students in future. Benefiting from the post-sars recovery and the increase in conference and academic exchanges, the Ng Tor Tai International House ("the House") recorded an operating profit of $2.6 million after depreciation and reserve provision, thus realizing a return to the University's investment in the building in the form of a license fee for the first time. Most of the advances made by the University to the House were fully repaid at the end of the financial year. Capital and Other Projects 10 Treasurer s Report!!"#$!"#$%&'()*+,-./01!"#$%&'()*(+',-./!"#$%&'(')*+!!"#!$%&!"#$%&!"#$%&'()*+,-!"#$%&'(')*+,-'!"##$%&'()*+,-./!"#$%&'()*+',-./!"#$%&'())*+,-./!"#$%&'()*+,-./01!"#$%&'()*+,-./0,!"#$%&'()*++,-./0!"#$%&'()*+,-./0"!"#$%&'()*#+,-./0!"# There was no new Capital Grant approved by the Government in the year. Only four grants for Alternations, Additions and Improvement works totaling $12.2 million (2003: $40.4 million) were approved. Meanwhile, five projects were completed and the fund balances were returned to the Government. Site works for the College of International Education in Shek Mun, which will offer associate degree programmes, commenced in May 2004 and were progressing on schedule. All related legal documentations of the project were completed and the first tranche of the $359.2 million loan from the Government was received in July All governmental approval procedure for establishing the HKBU affiliated school in Shek Mun were completed in June 2004 and construction works commenced shortly afterwards. The construction costs of the school are funded mainly by the Government and partly by donations already secured. In collaboration with the Beijing Normal University, the

13 Treasurer s Report! 11!"#$%&'()*+,-./01!"#$%#&'()*(+,-!"#$%&'()*+,&-./$!"#$%&'!"()*+,-.!"#$%&!"#!"#$%&'()*+,-./01!"#$%&'()*+,-!!"#$%&'()*+),-./0!"#$%&'()*+,-./0!"#$!%&'(!"#$%!"#$%&'()*+&,!"#$%&'(!"#$%!"# "#$!"%&'!!"#$%&!"#$%&!"#$%!"#$%&!!"#$%&'()*+,!"#$%&'()*+,-. /.!"#$%&'()*+ University is in the process of applying for approval from the Ministry of Education in China to establish a United International College ("UIC") in Zhuhai, China. The UIC will have its own campus supporting a total population of 4,000 students, offering programmes leading to a range of academic awards from associate degree to post-graduate qualifications. The University has committed to inject over $100 million into this project. Donations and Benefactions During the year, the University received donations totaling $204.9 million (2003: $45.7 million), including a $100 million from a single donor. The donations have added $10.7 million (2003: $0.3 million) to the University Foundation Funds, $13.6 million (2003: $14.2 million) to various existing and upcoming capital projects, $10.5 million (2003: $8.4 million) to student scholarships, prizes, bursaries and loan funds, and $170.1 million (2003: $22.8 million) to other development funds. Of all the donations received during the year, the University was able to secure $75.7 million dollar-to-dollar matching grants from the Matching Grant Scheme introduced by the Government last year.!"#$!" #$%&'()*+,-./!"#!$%&'()*)+,-!"#$%&'()#*+!"#$%&'()*+,-*./0!"#$%&!'()*+,-.!"#$%&'()*+,-!"#$%&'"()*!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+,-#./0!"#$%&'()*+,-./0!"#$%&'(&)*+,-./0 Fund Balances and Reserves Total funds held by the University at the end of 2003/04 were $1,622.0 million (2003: $1,153.9 million). They included a balance of $893.9 million (2003: $637.4 million) on Restricted Funds, and $728.1 million (2003: $516.5 million) on Other Funds. The significant growth in the total funds over the year does not mean a greater capability of the University to shoulder a higher recurrent expenditure base, since most of the increase arose from donations with designated purposes and from a conscious effort to carry forward budget balance to future periods in anticipation of a shrinking recurrent budget. INVESTMENT RETURN The recovery of the investment markets in the second half of

14 !!!"#$%#&'()*+,-./!"#"$%& '()*+,-.!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'(#)*+,-./0!"#$%&'()*+,-./01!"!"#$%&'()*+,-./01!""#!$%&'()*+,%-.!"#$%&'()*+,-./01!"#!"#$%%&'()*+!!"#$%&'()*+,-.!"#!"#$%&!!"#$%&'()*+!"#$%&'()*+,-.)/0!"#$%"&!"#$%&!"#$%&!"!"#!"#$%&'()*+,-./!"#$%&'(")*+,-./0!"#$%&'"(!"#$!"#$%&!$#$!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*+,-./0!"#$%%&'%()*+,-./ 2003 enabled the University to record a 17.4% overall return for the year on investments held by the investment managers. While interest rate was at its lowest level for most of the financial year, the higher cash balance attributable to additional donations and matching grants received during the year helped to increase interest income by 18%. To further reduce the volatility in investment returns in future, the University has decided to allocate part of its investment assets in hedge funds. The search for a suitable vehicle and a hedge fund manager has just been started towards the end of the financial year. SUPERANNUATION FUNDS The Hong Kong Baptist University 1998 Superannuation Fund ("the Fund"), a members' choice Occupational Retirement Schemes exempted from the Mandatory Provident Fund Schemes ("MPF") Ordinance, and a MPF scheme continued to operate under trust arrangement. The thirteen investment options under the Fund and the seven options under the MPF scheme registered a return ranging from -1.0% to +29.0% (2003: -5.3% to +7.3%), and from 0.0% to +28.5% (2003: -9.4% to +4.4%) respectively for the financial year. LOOKING FORWARD Although the University achieved remarkable financial results in the reporting year, there is no room for complacency. The large surplus recorded in the year was mainly the result of two factors, viz. a successful donation drive with matching grants from the Government, the recurrence of which will be unlikely in the near future; and the conscious efforts of University colleagues in implementing cost-saving measures to prepare for further funding cuts by the Government. The UGC recurrent funding for 2004/05 year has already suffered a more than 10% cut and the funding picture in the next triennium remains uncertain. On the one hand, there is some hope that with the implementation of UGC's financial tightening measures, there would be further relaxing in accompanying funding rules to help out the UGC-funded institutions. On the Treasurer s Report! 12

15 13 Treasurer s Report!!"#$%&'()*+,-./0!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&%#'()*+,-./!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()&*+,-.%/!"#$%&'()*+,-./01!"#$% &'()*+,-./"!"#$%&'()*+,-./01!"#$%&'()*+!"#" $ other hand, the University has been utilizing its endowment fund income to make up for the funding shortfall on a regular basis in the past six years. Therefore it is imperative that the University continue to exercise prudent financial planning to maintain its long-term financial health. I trust that persistent due care would be exercised in assessing the use of development funds on all new projects, and that University resources would be utilized in the utmost efficient manner in the years ahead. Michael Wu Treasurer 14th December 2004

16 ! " # Report of the Auditors

17 ! " # Report of the Auditors!"#$%&"'() Auditors Report To the Council of Hong Kong Baptist University 15!!"!"#$%&!"#$%&'()*+,-./01! We have audited the financial statements on pages 19 to 59 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.! " # Report of the Auditors!"#$%&'!"#$%& '()*+,-./0!"#$%&'(!")*+,-!"#$%&'()*+,-./0$!"#$%&'()*+,-./01!"#$!"#$%&'() *+,-. Respective Responsibilities of the Council and Auditors The Council is responsible for preparation of the financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently, that judgements and estimates are made which are prudent and reasonable and that the reasons for any significant departure from applicable accounting standards are stated.!"#$%&'()*+,-./01 It is our responsibility to form an independent opinion, based!"#$$%&'(!" on our audit, on those financial statements and to report our!"#$%&'()*+,-./' opinion solely to you, in accordance with statue 26 of Hong!"#$%"&'()* +,- Kong Baptist University Ordinance (Cap. 1126), and for no other!"#$%&'()*+,-.)"/ purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.!"!"#$%&'(%)*+!"#!"#$!%&'()*+,-+! Basis of Opinion We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified!"#$%&'()*+,-./01!"#$%&'()*+,-./01!"#$%&'()*"+,-./ Public Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the ==!"#$%&'()*+,-./ significant estimates and judgements made by the Council in!"#$%&'(!"#$%&'()*+,-./01!"#$%&'()!*+,-.!"#$%&'()*+,-./0"!"#$%&'()*#+,-."/!"#$%&'()*+,-./01 the preparation of the financial statements, and of whether the accounting policies are appropriate to the University s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from!"#$!%&'()*+,-./!"#$% material misstatement. In forming our opinion we also evaluated

18 !"#$%&'()*+,-./01 ==!"##$%&'()*+,-. ==!"#$%&'()*+,-.!"#$%&'()*+,-./!"!"#$%&!"#" $%&' the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, the financial statements give a true and fair view of the state of affairs of the University as 30th June 2004 and of the surplus and cash flows of the University for the year then ended and have been properly prepared in accordance with accounting principles generally accepted in Hong Kong. KPMG Certified Public Accountants Hong Kong, 14th December 2004! " # 16 Report of the Auditors

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20 ! Financial Statements!"!"!"#$%!"# Income and Expenditure Statement Balance Sheet Cash Flow Statement Statement of Changes in Fund Balances

21 Income and Expenditure Statement!!"#$%&'()#*+,- Income and Expenditure Statement for the year ended 30th June 2004 (!) Note Restated (Expressed in thousands of dollars) Income and Expenditure Statement Income! Government Subventions 3 860, ,021!"#$%& Tuition, Programmes and Other Fees 4 507, ,802!"#$ Interest and Investment Income 5 144,626 41,720!"# Donations and Benefactions 6 204,885 45,651! Auxiliary Services 7 59,777 49,631! Other Income 8 19,415 17,138 1,797,300 1,457,963 Expenditure 9!" Learning and Research!" Instruction and Research 810, ,862 Library 48,048 52,079!"# Central Computing Facilities 56,729 61,238!"# Other Academic Services 27,509 31,358! Institutional Support!"#$ Management and General 128, ,319!"#$ Premises and Related Expenses 173, ,539!"#$%& Students and General Education Services 61,560 59,223! Other Activities 22,964 19,363 1,329,186 1,313,981!"#$% Surplus for the year before transfers 468, ,982! Transfers to:! Restricted Funds , ,007! Other Funds ,065 31,975!" Surplus for the year 468, ,982!"#$%$#&'()*+,-./0(1234 The notes set out on pages 25 to 59 form an integral part of the financial statements.!"##$%&"'&$()*+,-./0 Approved and authorised for issue by the Council on 14th December Michael P K Wu Ng Ching Fai Alex P C Shuen Treasurer President & Vice-Chancellor Director of Finance

22 ! " Balance Sheet!"#$%&'()*+ Balance Sheet as at 30th June 2004 (!) Note Restated (Expressed in thousands of dollars) !" Non-Current Assets!"#$% Property, Plant and Equipment , ,060 Investments , , , ,273! Current Assets Investments , ,279!"#$ Accounts Receivable and Prepayments 16 37,020 27,697! Term Deposits 279, ,718!" Cash and Cash Equivalents ,242 89,867 1,353,753 1,075,561 20! " Balance Sheet! Current Liabilities! Deferred Income , ,443!"# Provision of Employee Benefits 19 83,288 86,045!"#$% Accounts Payable and Accruals 21 70,941 74,735! Government Loans 22 8,620 8, , ,843!"# Net Current Assets 1,023, ,718!"#$%& Total Assets Less Current Liabilities 1,724,041 1,267,991!" Non-Current Liabilities!"# Provision of Employee Benefits 19 41,680 45,124! Government Loans 22 60,341 68,961! NET ASSETS 1,622,020 1,153,906! Restricted Funds , ,407! Other Funds , ,499! TOTAL FUNDS 1,622,020 1,153,906!"#$%$#&'()*+,-./0(1234 The notes set out on pages 25 to 59 form an integral part of the financial statements.

23 ! " Cash Flow Statement!!"#$%&'()#*+,-./ Cash Flow Statement for the year ended 30th June 2004 (!) Restated (Expressed in thousands of dollars) ! Operating Activities Cash Flow Statement! " 21 Surplus for the year 468, ,982! Adjustments for:! Interest Income (21,862) (18,503) Depreciation 14,909 13,785!"#$% Unrealised Gain on Investments (31,643) (30,523)!"!#$ Re-investment of Investment Income (87,576) 7,818!"#$ Loss on Disposal of Fixed Assets 45 25!"#$%&'()/ Exchange (Gain)/Loss on Purchase of Certificates of Deposit (335) 43!"#$% Amortization of Discount of Certificates of Deposit !"#$%&' Operating Result Before Changes in Working Capital 342, ,484!"#$!%&'()* Increase in Accounts Receivable, Prepayments and Deposits (9,587) (7,272)!"#!$%()/ (Decrease)/ Increase in Accounts Payable and Accruals (7,909) 6,238!"#$ Increase in Deferred Income 11,457 5,051!"#$ Transfer to Capital Projects (8,316) (1,560)!"#$%&' Net Cash from Operating Activities 328, ,941!"#$%& Cash Flows in Investing Activities! Interest Received 22,126 16,748! Dividend Received 72 62!"#$ Increase in Term Deposits (101,347) (70,571)! Increase in Fund Invested (94) (138)!"# Payment to acquire Fixed Assets (13,201) (4,481)!"# Payment to acquire Listed Shares - (347)!" Payment to acquire Certificate of Deposit (326,899) (315,985)!"#$%&' Proceeds from Matured Certificates of Deposit 172, ,249!"#$%&'() Net Cash Outflow from Purchase of Investments (4,405) (5,988)!"# Payment for Capital Projects (53,696) (41,273)!"#$%&' Net Cash Outflow from Investing Activities (304,999) (227,724)!"#$%& Cash Flows from Financing Activities!"# Funds received for Capital Projects 59,926 42,497!"# Repayment of Long Term Loan (8,620) (8,620)!"#$%&' Net Cash Outflow from Financing Activities 51,306 33,877!"#$%! Net Increase/(Decrease) in Cash and Cash Equivalents 74,375 (73,906)!"#$%&'#$ Cash and Cash Equivalents at the beginning of the Year 89, ,773!"#$%&'#$ Cash and Cash Equivalents at the end of the Year 164,242 89,867!"#$%$#&'()*+,-./0(1234 The notes set out on pages 25 to 59 form an integral part of the financial statements.

24 ! " # $ % Statement of Changes in Fund Balances!!"#$%&'()#*+,-./012 Statement of Changes in Fund Balances for the Year Ended 30th June 2004!"#!! UGC Equalization Restricted Other (!) (Expressed in thousands of dollars) Account Funds Funds Total (Note 10) (Note 11)!"#$%&' Balance as at 1 July , ,828 1,011,465!"#$ ( 2) Changes in Accounting Policies (Note 2) - (28,506) 26,965 (1,541)! Restated Balance - 537, ,793 1,009,924!"# () Transfer from Income and Expenditure Statement (Restated) - 112,007 31, ,982!"# Inter-Fund Transfer - (11,731) 11,731 -!"# $%&' Balance as at 30 June , ,499 1,153,906!"#$%&'( Balance as at 1 July , , ,190 1,159,904!"#$ ( 2) Changes in Accounting Policies (Note 2) (33,232) (30,075) 57,309! Restated Balance - 637, ,499 1,153,906!"# Transfer from Income and Expenditure Statement (5,998) - 265, , , Statement of Changes in Fund Balances! " # $ %!"# Inter-Fund Transfer - (8,549) 8,549 -!"#$%&'( Balance as at 30 June , ,113 1,622,020!"#$%$#&'()*+,-./0(1234 The notes set out on pages 25 to 59 form an integral part of the financial statements.

25

26 ! " # Notes on the Financial Statements!"#!"#$!!"#$%&!"#$!"#!!!!!"#$%!"#$%!"#$%!"#$!"!!"#!"#!"#$%!!"#$%!"#!"#$!"#!! Significant Accounting Policies Changes in Accounting Policies Government Subventions Tuition, Programmes and Other Fees Interest and Investment Income Donations and Benefactions Auxiliary Services Other Income Expenditure Restricted Funds Other Funds Property, Plant and Equipment Investments in Subsidiaries Interest in Jointly Controlled Entity Investments Accounts Receivable and Prepayments Cash and Cash Equivalents Deferred Income Provision of Employee Benefits Employee Retirement Benefits Accounts Payable and Accruals Government Loans Related Parties Transaction Capital Commitments Operating Lease Commitments Post Balance Sheet Events Tax Comparative Figures Other Information

27 ! " # NK!"# 1. Significant Accounting Policies E~F!"#$% (a) Statement of compliance!"#$%&'()*+,)- These financial statements have been prepared in 25!"#!"#$%&'!"#!"#$%! accordance with all applicable Hong Kong Financial Reporting Standards (which includes all applicable! " #!"#$%&'()*+,-.!"#$%&'()*+,-!"#$%&' EÄF!"#$%&!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+ EÅF (b) Statements of Standard Accounting Practice ("SSAP") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and accounting principles generally accepted in Hong Kong. A summary of the significant accounting policies adopted by the University is set out below. Basis of preparation of the financial statements The measurement basis used in the preparation of the financial statements is historical cost modified by the marking to market of certain investments in securities as explained in the accounting policies set out below.!"#$%&"#'()*+,!"#$%&'()*+,-. (c) Consolidation!"# No consolidated financial statements are prepared as the University's interest in the results and net assets of the EÇF!!"#$%&'()*(+,- (d) subsidiaries and jointly controlled entities are immaterial. Subsidiaries!"#$%&'()*(+,- A subsidiary is an entity controlled, directly or indirectly,!"#$%&'()*+,-. by the University. Subsidiaries are considered to be!"#$%&'()*+,-. controlled if the University has the power, directly or indirectly, to govern the financial and operating policies, so as to obtain benefits from their activities. In the University's Balance Sheet, an investment in a subsidiary is stated at cost less any impairment losses.!"#$%&'()*+,!-!"#$%&'()*+, EÉF!!"#$%&'()*+,-.!"#$%&'()*+%,-!"#$%&'()*+,-.!"#!$%&'()*+,-! (e) Jointly controlled entities A jointly controlled entity is an entity which operates under a contractual arrangement between the University and other parties, where the contractual arrangement establishes that the University and one or more of the other parties share joint control over the economic activities of the entity.

28 In the University's Balance Sheet, its investments in jointly controlled entities are stated at cost less impairment losses. (f) Other investments in securities The University's policies for investments in securities other than investments in subsidiaries and jointly controlled entities are as follows: (i) Dated debt securities that the University has the ability and intention to hold to maturity are classified as held-tomaturity securities. Held-to-maturity securities are stated in the Balance Sheet at amortised cost less any provisions for diminution in value. Provisions are made when carrying amounts are not expected to be fully recovered and are recognised as an expense in the Income and Expenditure Statement, such provisions being determined for each investment individually. 26! " # EááF (ii) Investments held on a continuing basis for an identified long-term purpose are classified as investment securities. Investment securities are stated in the Balance Sheet at cost less any provisions for diminution in value. Provisions are made when the fair values have declined below the carrying amounts, unless there is evidence that the decline is temporary, and are recognised as an expense in the Income and Expenditure Statement, such provisions being determined for each investment individually.!"#$%&'()*+,!-!"#$%&'()*+, EÑF!"#!"#$%&'#$()*+,!"#$%&'() EáF!"# $% &'()*+(!"#$%&'()!*+,!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*$+,-!"#$%&'()*+,-.!"#"$%&'()*+&'!"#$"%&'()*+!"#$%&'()*+,-.!"#$%&'()*+,%-!"#$%&'()*+,-.!"#$%&'()*+,-!"#$%&'()*+,-.!"#$%&'()* EáááF!"#$%$&'()*+,-!"#$%&'()*+,-!"#$%&'()*+,-!"#$%&'()*+,-.!" (iii) Provisions against the carrying value of held-to-maturity securities and investment securities are written back when the circumstances and events that led to the write-down or write-off cease to exist and there is persuasive evidence that the new circumstances and events will persist for the foreseeable future. EáîF!"#$% &'()*+,-!"#$%&'()*+,-.!"#$%& (iv)all other securities are stated in the Balance Sheet at fair value. Changes in fair value are recognised in the Income and Expenditure Statement as they arise.

29 27! " # (v) Profits or losses on disposal of investments in securities are determined as the difference between the estimated net disposal proceeds and the carrying amount of the investments and are accounted for in the Income and Expenditure Statement as they arise. (g) Fixed assets (i) Fixed assets acquired for UGC-funded activities As a government-subvented organisation, the University has taken advantage of the exemption from compliance with SSAP 17 "Property, plant and equipment". The University has elected to write off all the fixed assets acquired for UGC-funded activities, including those funded by UGC and University Capital Funds, in the year of acquisition through the Income and Expenditure Statement. (ii) Fixed assets acquired for self-financed activities Fixed assets acquired for self-financed activities are capitalized at cost, with the donation elements of the expenditure written off in the same year, less accumulated depreciation and impairment losses. Depreciation is calculated to write off the remaining cost of these fixed assets over their estimated useful lives as follows: Leasehold land the remaining lease terms Buildings 25 to 50 years Furniture and Fixtures 10 years Office Equipment 5 years Computing/Teaching Equipment 3 to 4 years EÜF! (h) Leased assets Leases of assets under which the lessor has not transferred all the risks and benefits of ownership are classified as operating leases. EáF!"#$%&'( (i) Assets held for use in operating leases EîF!"#$%&'()*+,-!"#$%&'()&*+,"!"#$%&'()*+,- EÖF! EáF!"#$%&'()*!"#$%&'()*+,-.!"#$%&'()*+!"#$%!"#$%&!"#$%&'()*+,!"#$%&'()*"#+,!"#$%&'()*+,-. EááF!"#$%&'(!"#$%&'( )*+,-!"#$%&'()*$+,!"#$%&'()*+,-.!"#$%&'()*+',-!"#$%&'!!! "!"!"!"#$!!"#$%"&'()*+,-!"#$%&'()*!"+!"#$%&'#()*+,-!"#$%&'()*+,-.!"#$%&'()*%&+,!"#$ NEáF!"#$ Where the University leases out assets under operating leases, the assets are included in the Balance Sheet according to their nature and, where applicable, are depreciated in accordance with the University's depreciation policies.

30 !"#$%&'()*+,-. NEäFEîF!"#$%&'()*% EááF!"#!"#$%&'()*+,(-.!"#$%&'()*$+(!"#$%&'()*+,-. EáF!!"#$%&'()*+,*-!"#$%&'() *+,!"#$%&'() *+,!"#$%&'( J=!"# J=!"#$%!"&'(!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()* Impairment losses are accounted for in accordance with the accounting policy as set out in note 1(i). Revenue arising from operating leases is recognised in accordance with the University's revenue recognition policies, as set out in Note 1(l)(v). (ii) Operating lease charges Where the University has the use of assets under operating leases, payments made under the leases are charged to the Income and Expenditure Statement in equal instalments over the accounting periods covered by the lease term. (i) Impairment of assets Internal and external sources of information are reviewed at each Balance Sheet date to identify indications that the following assets may be impaired or an impairment loss previously recognised no longer exists or may have decreased: - fixed assets; and - investments in subsidiaries and jointly controlled entities. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised in the Income and Expenditure Statement whenever the carrying amount of such an asset exceeds its recoverable amount. 28! " #!"#$%&'()*+!"#!"#$% &'()*+,-!"#$%&'()*+,-!"#$%&'()*+,-.!"#$%&'()*+,-"!"#$%&'()*+,-!"#$%&' ()*#+!"#$%&'()*+), The recoverable amount of an asset is the greater of its net selling price and value in use. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. A reversal of impairment losses is limited to the asset's carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to the Income and Expenditure Statement in the year in which the reversals are recognised.

31 EàF! (j) Cash equivalents!"#$%&'()*+ Cash and cash equivalents comprise cash at bank and on!"#$%&'()*+,$- hand, demand deposits with banks and other financial 29! " #!"#$%&'()*+",-!"#$%&'#$()*+,!"#!$%&'()*+,-!"#$%&'()*+,-.!"#$ EâF!"#$!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$ %&'()*+!"#$%&'()*+,-.!"#$%&'()*+,- (k) institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and are within three months of maturity at acquisition. Provisions and contingent liabilities Provisions are recognised for liabilities of uncertain timing or amount when the University has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where it is not probable that an outflow of economic!"#$%&'()*+,!- benefits will be required, or the amount cannot be!"#$%&'()*+,- estimated reliably, the obligation is disclosed as a!"#$%&'()* contingent liability, unless the probability of outflow of economic benefits is remote. EäF! (l) Revenue recognition!"#$%&'()*+,-. Provided it is probable that the economic benefits will flow!"#$%&'()* to the University and the revenue and costs, if applicable,!"#$%&'()!*+, can be measured reliably, revenue is recognised in the Income and Expenditure Statement as follows: EáF!!"#$%&'!()*+,!"#$%&'( "#)!"# $!"#$%&'()*+,-.!"#$%&'()*+,!"#$%&'#()*+,-!"#$%&'()*+,-.! (i) Government grants Government grants mainly consist of block grants, matching grants, supplementary grants, reserved supplementary grants, earmarked grants and capital grants. Block grants and matching grants are recognised as revenue in the Income and Expenditure Statement on an accrual basis. Any block grants which are received in excess of the related expenditure are transferred to General and Development Reserve in accordance with UGC requirement.

32 !"#$%&'()*+,-!!"#$%&'()*+,-!"#$%&'()*+,!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&!"#"$!"#$%&'(!"#!"#$%&'(#)*+, EááF!"#$%&!"#$%&'()*+,-!"#$%&'()*+$,- EáááF! J!"#$%#&'()*+!"#$%&'()*%!"#$%&'()*+,!"#$%&'()*+!"#$%"&'()*+!"# Government grants other than block grants and matching grants are recognised in the Balance Sheet initially as deferred income when there is reasonable assurance that they will be received and that the University will comply with the conditions attached to them. Other grants that compensate the University for expenses incurred, including fixed assets acquired for UGC-funded activities, are recognised as revenue in the Income and Expenditure Statement on a systematic basis in the same periods in which the related expenditures are incurred. (ii) Tuitions, programmes and other fees Tuitions, programmes and other fees are recognised on an accrual basis and unearned fees are treated as deferred income. (iii) Interest income - Interest income from dated debt securities intended to be held to maturity is recognised as it accrues, as adjusted by the amortisation of the premium or discount on acquisition, so as to achieve a constant rate of return over the period from the date of purchase to the date of maturity. 30! " # J!"#$%&'()*+,!"#$%&'()* - Interest income from bank deposits is accrued on a time-apportioned basis by reference to the principal outstanding and the rate applicable. EáîF J!"#$%&'()*+$!"#$%&'( (iv)dividends - Dividend income from unlisted investments is recognised when the shareholder's right to receive payment is established. J!"#$%&'(!"#!"#$ - Dividend income from listed investments is recognised when the share price of the investment goes exdividend. EîF!" #$%!"#$ %$&'(!)* (v) Rental income from operating leases Rental income receivable under operating leases is recognised in the Income and Expenditure Statement in

33 !"#$%&'()*+,-.!"# equal instalments over the accounting periods covered by the lease term. 31! " # (vi)donations Donations are recognised in the Income and Expenditure Statement when the University becomes entitled to the donations and it is probable that they will be received, which is generally upon receipt of cash. Donations in kind are not recognised in the financial statements. (vii) Other Service Income Other service income is recognised in the Income and Expenditure Statement when the relevant service is rendered. (m) Employee benefits Salaries, gratuities, paid annual leave, leave passage and the cost to the University of monetary and non-monetary benefits are accrued in the year in which the associated services are rendered by employees of the University. EîáF!"#$%&'()*+,!"#$%&'()$%*+!"#$%&'()*+,-. EîááF!"#!"#$%&'!()*+"!"# EãF!!"# $%& '()*!"#$%&#$'()*+!"#$%&'()*+,-!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+,-!"#$%&'()*+,-(!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+,- (n) Contributions to the defined contribution retirement schemes, including Mandatory Provident Fund Scheme as required under the Hong Kong Mandatory Provident Fund Schemes Ordinance, is recognised as an expense in the Income and Expenditure Statement as incurred. Termination benefits are recognised when, and only when, the University demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal. Translation of foreign currencies EåF!!"#$%&'($%)*)+!"#$%&'()*+&,# Foreign currency transactions during the year are translated into Hong Kong dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into Hong Kong dollars at the exchange rates ruling at the Balance

34 !"#$%&'()(*+,!"#$%&'()*+,-.!"# EçF!"!"#$%&'()*+,-.!"#$%&'#$%&()!"#$%&'()*+,-.!"#$%&'(&)*+,'!"#$%&'()*+,-.!"#$%&'()*+,-(!"# $%&'()*+,!"#$%&'()*+,!"#$%&!'(#$%)* (o) Sheet date. Exchange gains and losses are dealt with in the Income and Expenditure Statement. Related parties For the purposes of these financial statements, parties are considered to be related to the University if the University has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the University and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. 32! " #

35 OK!"#$ 2. Changes in Accounting Policies!"#$%&'()*+,-. In previous years, the University prepared its financial!"#$%&'()*+,-. statements in accordance with accounting policies 33! " #! "#$%&'())*+,!"#$%&'()*'+,-!!"#$%&'!!"#$%&'()*+,,!"#$%&!'()*+,-!"#$%&'()*+,-.!"#$%&'()*+,-.!"#!"#$%&&'()*+,-!"#$%&'()*+,!$!"#$%&'()*+,-.!"#$%&'()*+ generally adopted by higher education institutions in Hong Kong. With effect from 1 July 2003, all UGC-funded institutions decided to comply with all applicable Hong Kong Financial Reporting Standards issued by the HKICPA and accounting principles generally accepted in Hong Kong in the preparation of their annual financial statements. The UGC-funded institutions, including the University, believe that this change in the basis of preparation of financial statements will result in a more appropriate presentation of events or transactions in the financial statements of the UGC-funded institutions. A summary of the changes in accounting policies adopted by the University with effect from 1 July 2003 is set out below. The new accounting policies have been adopted retrospectively, with the opening fund balances and the E~F! comparative information adjusted for the amounts relating!"#$%&'()*+,-.!"#$%&'()*+'( to the prior periods as disclosed in the Statement of Changes in Fund Balances.!"#$%&!'()*+,-!"#$%&'()*+,-. (a) Government grants!"#$%&"#'()*+, In prior years, grants were not matched with the related!"#$%&'()#*+ costs which they were intended to compensate, government grants other than capital grants and earmarked grants were recognised as income in the Income and!"#$%&'()*+,- Expenditure Statement when the University became!"#$%&'()* entitled to the grants and it was probable that they would!"#$%&'()*+,- be received, which was generally upon receipt of cash.!"#$%&' NEäFEáF!" Capital grants and earmarked grants were recognised as!"#$%&'()*+,-. income when the related expenditures were written off!"#$%&'()*+, in the Income and Expenditure Statement.!"#$%&'!"!"#$%&'()*+,-. With effect from 1 July 2003, in order to comply with!"#$%&'(')*+ SSAP 35 issued by the HKICPA, the University adopted a new policy for government grants as set out in note 1(l)(i). As a result of the new accounting policy, the University's surplus for the year has been decreased by $10.2 million

36 EÄF!"#$%& (2003: decreased by $3.0 million) and the University's net!"#$%&%'()$*+,!"#$%&'()*+,-. assets as at the year end have been decreased by $54.2 million (2003: decreased by 44.0 million).!"#$%&'()*++,-!"#$%&'()*+,)-!"#$%&'()*+, -!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$%&'()*+,-.!"#$% &'()*&+!"#$%&'()*+,-.!"#$%!"#$%!"#$!"#$%&'!"#$%&'()*!"#$%&'( (b) Accrual accounting for operating expenditure Operating expenditure charged to the Income and Expenditure Statements in prior years included commitments in respect of outstanding purchase orders for which goods or services had not been received at the Balance Sheet date. With effect from 1 July 2003, in order to comply with SSAP 1 issued by the HKICPA, operating expenditure is recognised in the Income and Expenditure Statement when there is a direct association between the costs incurred and the earning of specific items of income, and when there is a present obligation to pay at the Balance Sheet date, which generally arises upon the receipt of goods or services. 34! " # As a result of the new accounting policy, the University's EÅF!"#$%&'( surplus for the year has been increased by $1.4 million!"#$%&'()*+,#-!"#$%&'()*+,-!""#$%&'()*+,- (2003: increased by $5.3 million) and the net assets as at the year end have been increased by $39.4 million (2003: increased by $38.0 million).!"# $%&!'()*+!"#$%&'()*+,- (c) Endowment Donations!"#$%&'()*+ NEä F Donations of an endowment nature in prior years were EîáF not credited through the Income and Expenditure Statement to the relevant fund accounts. They were credited directly to the relevant fund balances. With effect from 1 July 2003,!"#$%&'()*+,-. in order to comply with SSAP 18 issued by HKICPA, the!"#$%&'!"# University adopted the same policy on all donations!"#$%&!"#$% irrespective of their nature as set out in note 1(l)(vi).!"#$ As a result of the new accounting policy, the University's surplus for the year has been increased by $13.7 million (2003: increased by $5.1 million) and there is no impact on the net assets of the University.

37 EÇF!"#$%&'()*+,-!" (d) The effects of the changes in accounting policies to the opening fund balances are summarized as follows: 35! " #!"#!! (!) UGC Equalization Restricted Other (Expressed in thousands of dollars) Account Funds Funds Total!"#$%&' -! Balance as at 1 July 2002 as Previously Reported!"#$%&'() Prior Year Adjustments arising from the Changes in Accounting Policies! Government Grants!"#$ Accrual Accounting for Operating Expenditure!"#$%&' - Balance as at 1 July 2002 as Restated!"#$%&'( -! Balance as at 1 July 2003 as Previously Reported - 565, ,828 1,011,465 - (34,206) - (34,206) - 5,700 26,965 32, , ,793 1,009,924 33, , ,190 1,159,904!"#$%&'() Prior Year Adjustments arising from the Changes in Accounting Policies! Government Grants!"#$ Accrual Accounting for Operating Expenditure (28,387) (4,845) (43,991) 28,387 (43,991) 13,916 28,922 37,993!"#$%&'( - Balance as at 1 July 2003 as Restated - 637, ,499 1,153,906

38 PK! Government Subventions (!) Restated (Expressed in thousands of dollars) !" Subventions from UGC! Block Grants 541, ,836! / Supplementary Grants/Adjustments 13,844 45,444!" Matching Grants 75,740 3, , ,983! Earmarked Grants Research 22,498 18,962 Others 29,131 27,255!"# Housing Related 102, , , ,676!"#$ Rates and Government Rent Refund 21,912 10,353!"#$%!"#$ Capital Grants and AA & I Block Allocation 42,735 34,832 36! " # 849, ,844!"#$% Grants from Government Agencies 11,157 9, , ,021 : Note :!" Matching Grants!! /!"#$%&'()*+,-./ ()*+,-9:%;0<=>?@#A(BCDE0F)*+,-6GHIJK: Following the introduction of the Matching Grant Scheme ("the Scheme") by the UGC in the financial year 2002/03, the University has applied and received the following dollar-for-dollar matching grants for donations that were eligible under the Scheme. The eligible donations and their corresponding matching grants and the related expenditure are detailed as follows: ! Opening Balance 6,686 - Add: Donations 75,740 3,703!" Matching Grants 75,740 3,703 Total Income 151,480 7,406 Less: Expenditures!" Instruction and Research 6, !"#$ Management and General 1, !"#$%& Students and General Education Services 1, Total Expenditures 8, ! Closing Balance 149,201 6,686

39 QK!"#$%& Tuition, Programmes and Other Fees (!) (Expressed in thousands of dollars) ! " #!"# UGC-Funded programmes Tuition Fees 215, ,660!"#$ Programmes and Other Fees 4,132 3, , ,474! "#$ Non UGC-Funded programmes Tuition Fees 280, ,511!"#$ Programmes and Other Fees 7,164 9,817 RK!"#$ Interest and Investment Income 288, , , ,802 (!) (Expressed in thousands of dollars) !"#$%&#$ Net Realised and Unrealised Holding Gains on Investments in Securities 118,111 22,508! Interest Income! Listed Investments !" Unlisted Investments 21,096 17,691 21,543 18,183!"# Dividends from Listed Securities Others 4,950 1, ,626 41,720

40 SK!"# Donations and Benefactions (!) Restated (Expressed in thousands of dollars) ! Capital Projects 13,571 14,202! "# Scholarships, Prizes and Bursaries 8,342 6,407!"#$%& Endowment 13,653 5,059 Others 169,319 19, ,885 45,651 : Note: (1)!"#$%&'()*%+,-./ :;<=>?@A@B>CDEFG!HIJ<=>?KLBMCDE,NOMA@B@CDE=PQ!"# For University-funded projects not yet completed at the beginning of the year, the Hong Kong Jockey Club Charities Trust has pledged a total donation of $233.2 million, of which $206.1 million has been received up to 30 June 2004 and $13.3 million was received during the year. (2)!"#$ %&'()*+ United Board for Christian Higher Education in Asia!"#$%&'()*+,-./ :;+,-<=->?@! Included in the Donations and Benefactions are HK$5.4 million from United Board for Christian Higher Education in Asia to support various christian activities, fellowship programme of the University and Asia Christian Higher Education Institution during the year. 38! " # TK! Auxiliary Services (!) (Expressed in thousands of dollars) ! Residence Halls 16,947 15,762! Rental Income 5,383 6,487!"# Rental Contribution from Staff 3,972 4,880 Licence Fees 2,052 1,914! Service Income 16,525 11,364! Consultancy Income 14,898 9,224 59,777 49,631